ex10-3.htm


    EXHIBIT 10.3

    
 

    Exhibit
B

     

    ANALYSTS
INTERNATIONAL CORPORATION

     

    ANNUAL
MANAGEMENT INCENTIVE PLAN (AMIP)

     

    Fiscal
Year 2008 Only

     

    1. Term of this
AMIP.  This Annual Management Incentive Plan (“AMIP” or the
“Plan”) is Exhibit B to that certain Employment Agreement between Analysts
International Corporation (the “Company”) and Randy W. Strobel (“Executive”)
having a Commencement Date of August 25, 2008 (the “Employment Agreement”), and
is an integral part of said Employment Agreement.  This AMIP shall
become effective on the Commencement Date specified in the Employment Agreement,
and replaces all prior incentive compensation plans and other arrangements
between the parties.  It is effective for the 2008 Fiscal Year only
(January 1, 2008 through December 31, 2008), and will be replaced, amended or
eliminated thereafter.

     

    2. Terms
of Participation.

     

    (a) Eligibility.  Before
an employee may participate in the Plan, the employee must be designated by
Analysts International corporate management or, in the case of an executive
officer, the Compensation Committee of the Company’s Board of Directors as
eligible to participate and must execute, if requested by the Company, an
employment agreement, in such form as the Company may require.  The
Company’s failure to request the employee to sign an employment agreement in
order to participate in the Plan shall in no way modify, amend, terminate or
void any employment agreement, non-compete, confidentiality or similar agreement
previously signed by the employee and such agreement shall remain in full force
and effect.

     

    (b) Changes in position or Gross
Base Salary.  If, during the course of the fiscal year, an
employee accepts a new position with the Company or receives a new Gross Base
Salary (as defined in Section 3(d)(i) below), the employee’s incentive
distribution, if any, shall be calculated using the Gross Base Salary as of
December 31, 2008, unless otherwise agreed to by the Company in
writing.

     

    (c) Not a Guarantee of
Continuing Employment.  The Plan is not intended as a guarantee
of continuing employment, the employment relationship between the Company and
participants in the Plan being terminable at any time by either the Company or
the participant, with or without cause, unless agreed to otherwise in
writing.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3. Incentive
Compensation – Components.

     

    (a) Incentive
Compensation.  Two types of senior management employees are
eligible to participate in this Plan – leaders of Strategic Support Service
Units (SSU) and leaders of Strategic Business Units (SBU).

     

    (i) For
leaders of SSUs, incentive compensation is based solely (100%) on company
performance.

     

    (ii) For
leaders of SBUs, incentive compensation is based on both company performance and
their individual SBU performance as further set forth herein.

     

    (b) Company Performance
Component.  The company component of the AMIP is based on one
and only one factor, Earnings per Share (EPS), as the same shall be disclosed in
the Company’s final fiscal year 2008 financial earnings release.

     

    (c) SBU Performance
Component.  The SBU performance component of the AMIP is based
on achievement of the individual SBU operating profit established for the
specific SBU in the CEO budget.

     

    (d) Condition to
Payment.  No payment of any kind will
be made under this Plan to SSU leaders if the company’s performance in terms of
EPS is below $0.05 a share.

     

    4. Leaders
of SSUs.

     

    For
leaders of Strategic Support Service Units (SSU), the range of potential payment
amounts is 0% to 70% of Gross Base Salary, as follows:

    


    
      	
              EPS
      (after AMIP
      payout)

            	
              %
      of SSU Leader’s Base Salary Payable as Incentive
    Compensation

            
	
              $0.03

            	
              0.0%

            
	
              $0.04

            	
              0.0%

            
	
              $0.05
      (CEO Budget)

            	
              30.0%

            
	
              $0.06

            	
              33.0%

            
	
              $0.07

            	
              33.0%

            
	
              $0.08

            	
              34.0%

            
	
              $0.09

            	
              36.0%

            
	
              $0.10

            	
              37.0%

            
	
              $0.11

            	
              38.0%

            
	
              $0.12

            	
              39.0%

            
	
              $0.13
      (Mgmt. Budget)

            	
              40.0%

            
	
              $0.14

            	
              42.5%

            
	
              $0.15

            	
              45.0%

            
	
              $0.16

            	
              47.5%

            
	
              $0.17

            	
              50.0%

            
	
              $0.18

            	
              52.5%

            
	
              $0.19

            	
              55.0%

            
	
              $0.20

            	
              57.5%

            
	
              $0.21

            	
              62.0%

            
	
              $.022

            	
              70%
      (maximum)

            


    

    


     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    5. Leaders
of SBUs.

     

    (a) For
leaders of SBUs, incentive compensation is based on both company performance and
their individual SBU performance.

     

    (b) At target
performance, the ratio between these two components will be 75% on company
performance and 25% on individual SBU performance.  “Target
performance” assumes that the Company achieves EPS of $0.05 after AMIP, and that
the SBU has achieved its individual operating profit financial objective as
established in the CEO budget for fiscal year 2008.

     

    (c) The range
of potential payment amounts to an eligible SBU leader is 0% to 70% of Gross
Base Salary, with a total targeted payment amount of 30% if both the Company and
the SBU achieves 100% of the target “CEO budget” for the fiscal
year.

     

    (d) The range
of potential payment amounts to an eligible SBU leader under the company
performance component is 0% to 52.5% of Gross Base Salary, with a target payment
amount of 22.5% if the Company achieves $.05 EPS.  There will be
no payment made of
the company performance component of the Plan if the company performance is
below $0.05 a share.  The following chart shows the range of payout of
the company component to SBU leaders based on EPS.

    


    
      	
              EPS
      (after AMIP payout)

            	
              %
      of SBU Leader’s  Base Salary Payable as Incentive
      Compensation

            
	
              $0.03

            	
              0.0%

            
	
              $0.04

            	
              0.0%

            
	
              $0.05
      (CEO budget)

            	
              22.5%

            
	
              $0.06

            	
              23.0%

            
	
              $0.07

            	
              24.0%

            
	
              $0.08

            	
              25.0%

            
	
              $0.09

            	
              26.0%

            
	
              $0.10

            	
              27.0%

            
	
              $0.11

            	
              28.0%

            
	
              $0.12

            	
              29.0%

            
	
              $0.13
      (Management Plan)

            	
              30.0%

            
	
              $0.14

            	
              32.5%

            
	
              $0.15

            	
              35.0%

            
	
              $0.16

            	
              37.5%

            
	
              $0.17

            	
              40.0%

            
	
              $0.18

            	
              42.5%

            
	
              $0.19

            	
              45.0%

            
	
              $0.20

            	
              47.5%

            
	
              $0.21

            	
              52.0%

            
	
              $0.22

            	
              52.5%

            


    

    


    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (e) Individual SBU Performance
Component (for leaders of SBUs only.)  The range of potential
payment amounts under the individual SBU performance component of the Plan is 0%
to 17.5%.  There will be no payment made under the
individual SBU performance component of the Plan if the company performance is
below $0.04 a share. The incentive compensation under the individual SBU
performance component of the Plan will vary based upon the Operating Profit
financial objective established for the specific SBU in the CEO
budget.  The following chart shows the range of the potential
incentive payout of the individual SBU performance component, based on Operating
Profit.

     

    
      	
              %
      of Planned Operating Profit Attainment (at a Company EPS of $0.04 or
      above)

            	
              %
      of SBU Leader’s  Base Salary

            
	
              Less
      than 70%

            	
              0%

            
	
              70%
      up to but not including 75%

            	
              2.5%

            
	
              75%
      up to but not including 80%

            	
              3.5%

            
	
              80%
      up to but not including 85%

            	
              4.5%

            
	
              85%
      up to but not including 90%

            	
              5.5%

            
	
              90%
      up to but not including 95%

            	
              6.5%

            
	
              95%
      up to but not including 100%

            	
              7.0%

            
	
              CEO
      Plan

                   100% up to but not including
      110%

            	
              7.5%

            
	
              110%
      up to but not including 120%

            	
              7.8%

            
	
              120%
      up to but not including 130%

            	
              8.0%

            
	
              130%
      up to but not including 140%

            	
              8.3%

            
	
              140%
      up to but not including 150%

            	
              8.5%

            
	
              150%
      up to but not including 160%

            	
              8.8%

            
	
              160%
      up to but not including 170%

            	
              9.0%

            
	
              170%
      up to but not including 180%

            	
              9.3%

            
	
              180%
      up to but not including 190%

            	
              9.5%

            
	
              190%
      up to but not including 200%

            	
              9.8%

            
	
              Management
      Plan

              200%
      up to but not including 210%

            	
              10%

            
	
              210%
      up to but not including 220%

            	
              11%

            
	
              220%
      up to but not including 230%

            	
              12%

            
	
              230%
      up to but not including 240%

            	
              13%

            
	
              240%
      up to but not including 250%

            	
              14%

            
	
              250%
      up to but not including 260%

            	
              15%

            
	
              260%
      up to but not including 270

            	
              16%

            
	
              270%
      up to but not including 275%

            	
              17%

            
	
              275%
      (maximum)

            	
              17.5%

            


    

    


     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    6. Calculation of Incentive
Compensation.  Incentive compensation called for in this Plan
shall be determined as set forth herein.

     

    (a) Gross Base
Salary.  Incentive compensation under the Plan shall be
calculated and determined on the basis of an employee’s Gross Base Salary in
effect on December 31, 2008.  “Gross Base Salary” means the
participant’s regular annualized cash compensation, before pre-tax deduction for
benefits, if any, paid for the period in the fiscal year with respect to which
an employee’s incentive compensation is being calculated
hereunder.  Specifically excluded from Gross Base Salary
are:  (i) amounts grossed up in any of an employee’s compensation for
tax reporting purposes; (ii) gain realized on the grant or exercise of stock
options and the grant of restricted stock or the lapse of conditions related
thereto; (iii) dividends credited to a restricted stock or stock subject to
options; (iv) incentive payments; (v) amounts paid for automobile allowance
and/or expenses; and (vi) any other amounts determined by the Company to be
other than regular cash compensation.

     

    (b) Process for
calculation.  The Chief Financial Officer and/or the Vice
President of Human Resources shall determine whether all prerequisites for
payment of incentive compensation have been met and shall calculate an
employee’s incentive amount subject to:  i) any changes that occur
during audit of the Company’s books by its independent auditors; and ii) to any
limits imposed by the terms and condition of the Plan.

     

    (c) Incentive
Amount.  The amount of incentive compensation shall be
calculated as defined in Section 3(b) and (c) and other terms and conditions of
the Plan, including but not limited to Sections 3(d)(ii), 3(d)(v)(2),
3(d)(vi)(1), 3(d)(vi)(2) and 5(b) hereof.

     

    (d) Distribution.  Incentive
compensation that has been earned and is payable under all terms of the Plan
will be distributed on an annual basis only.  Incentive compensation
under the Plan is not earned until the completion of the fiscal year financial
audit.  The Company anticipates that annual distributions will occur
during March of the year following completion of the fiscal year.

     

    (e) Limits on
Distributions.

     

    (i) Limit on
Individual Amount. The maximum payment to any one employee under the Plan shall
be 70% of Gross Base Salary.

     

    (ii) Profit
Requirements.  No participant shall receive an incentive distribution
under the Plan unless the Company is profitable as reported in its financial
results filed with the Securities and Exchange and achieves Earnings Per Share
(EPS) after AMIP payments of at least $0.04.

     

    7. Incentive
Protection.  Upon the occurrence of an event constituting a
Change of Control, as defined in the employee’s Change of Control Agreement
(Exhibit A to the Employment Agreement), neither the Company nor any successor
or assign shall have the right to modify, amend or terminate the
Plan.  Further, in the event of such a Change of Control,
determination of incentive compensation for the fiscal year will be calculated
under Section 3 based on:  (i) actual results through the month ended
prior to the Change of Control; and (ii) results as projected in the Management
Forecast for the remainder of the fiscal year or the six-month period beginning
with the month in which the Change of Control occurs, whichever is
shorter.  “Management Forecast” means the Company’s pre-tax profit
plan for the fiscal year as presented to and approved by the Board.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    8. General
Provisions.

     

    (a) Eligibility for
Distribution.  Unless otherwise provided for in writing, in
order to be eligible for any distribution or award, the employee must be a
full-time employee of the Company as of the date on which the distribution is
made. Without
limiting the Company’s right to damages or injunctive relief, a participant must
refund all incentive compensation payments received, during his or her last
twelve (12) months of employment with the Company if he or she violates any of
the provisions of the separate employment agreement referenced in Paragraph 2(a)
of the Plan

     

    (b) Revenue and
Profit.  Revenue and profit shall be determined by the Company
in accordance with the Company’s practices and procedures, and in compliance
with applicable rules of accounting and federal and state law and
regulations.  Specifically, but not by way of limitation, all items of
income and expense, and all adjustments to income by way of reserves,
write-downs or write-offs and all expenses (including but not limited to bad
debt expense, interest and depreciation), shall be recorded when determined by
the Company to have been receivable or incurred.

     

    (c) Termination and
Modification.  The Company reserves the right to terminate the
Plan or to modify the provisions hereof at any time and from time to
time.  Such termination or modification shall be effective when issued
by the Company, however once incentive compensation is earned by the employee,
the Company may not cancel payment of such incentive compensation.

     

    (d) Example of Potential
Payout.  For illustrative purposes only, an example of a
potential payout for Executive is shown below.

     

    

      
        	
                EXAMPLE
      ONLY:

              
	
                Gross Base Salary for purposes of 2008
      AMIP:

              	
                $250,000.00

              
	
                Total Incentive payment under AMIP if EPS of $0.05
      is achieved:

              	
                $75,000.00

              
	
                Consisting
      of:

              
	
                 

                § Company
      component = 30.00% of base salary

                 

              	 
      


      



     

    In the
event of any inconsistency or conflict between this AMIP and the Employment
Agreement, the terms of the Employment Agreement shall govern and control, and
take precedence.

     

    The
foregoing Annual Management Incentive Plan (AMIP) is agreed to and
accepted:

     

    
      	
              ANALYSTS
      INTERNATIONAL CORPORATION

            	
              RANDY
      W. STROBEL

              (“Executive”)

            
	
              By:
      /s/ Elmer N. Baldwin

              Title:
      President and CEO

            	
              By:
      /s/ Randy W. Strobel

              Date
      signed:  July 29, 2008

            
	
              Date
      signed: August 8, 2008

            	 
      


    

    


     

    
      
         

      

      
        6